University president takes $90,000 pay cut to give minimum wage workers raise

He swears it’s not for the publicity. Nevertheless, Raymond Burse, interim president of Kentucky State University, has inspired a few headlines across the border recently after announcing he’s giving minimum-wage workers on campus a raise --- by donating $90,000 out of his own pocket.

The move will boost the university’s lowest-paid salaries by from $7.25 per hour to $10.25/hr.

Income disparity between the rich and the poor, including what American workers should be fairly be paid, is a hotly contested issue across the U.S. The Occupy Wall Street movement may be gone, but the conversation it stirred up continues around the corporate board tables, union halls and in government.

Wealth gap growing in Canada

If you think we’re sheltered from the disparity problem in Canada, think again. The concentration of income among the super-rich on this side of the border has only grown over the past 20 years, while the poorest and middle-income groups has lost share.

The Conference Board of Canada warns we’re doing such a mediocre job of addressing income equality, we’ve already fallen well behind peer countries like Denmark, Belgium, Ireland and France and are in danger of seriously harming our economy, making us more prone to boom and bust cycles and less attractive to foreign direct investment.

“With any social inequality comes instability,” said Sheila Rao, senior research associate with the Ottawa-based board.

That sentiment was trumpeted this week in a new report by the rating agency Standard & Poor that suggests the widening gap between the wealthiest Americans and everyone else has made the economy more prone to boom-bust cycles and slowed the country’s recovery post-2008.

Specifically, the rising concentration of income among the top 1 per cent of earners has contributed to S&P’s cutting its 10-year growth forecast for the economy to a 2.5 per cent annual pace. The estimated pace five years ago was 2.8 per cent.

The S&P report says government policies on taxation and U.S. government transfers, such as Social Security and Medicare, have done little to narrow the gap. Instead, it suggests that greater access to education would help ease wealth disparities.

Rao agrees with the findings of the S&P report, noting higher educational attainment would help alleviate the problems.

“A better educated population is a more productive one. You can’t talk about growth and not think that education would have an impact. You need a skilled workforce,” she said.

As for Raymond Burse, he says he’s taking a stand “for the people.”

Burse was president of Kentucky State in the 1980s before working for General Electric as a senior executive and retiring in 2012, according to the Lexington Herald-Leader. He’s slated to earn $350,000 in his interim role at the university.

According to the newspaper, Kentucky's state legislature considered a bill this year that would have increased the state's minimum wage to $10.10, but the measure failed in the state senate.

The push is also being echoed on the federal level. U.S. President Obama is hoping to raise the federal minimum wage from $7.25 to $10.10/hr – a move the White House says will directly benefit more than 28 million workers across the country and make little things like paying rent, buying groceries and paying the electricity bill more manageable.

Several cities, including Seattle, San Francisco and Los Angeles, are also knocking around the idea of boosting minimum salaries upwards of $15/hr in the name of affordability.
The debate is one of clashing ideologies and, not surprisingly, there are plenty of voices in opposition. Many argue that higher minimum salaries will only force staffing cuts and threaten economic productivity -- not exactly what the U.S. needs as it continues to pull itself out of a long and painful recession.

And yet the numbers, are hard to ignore both in the U.S. and abroad. The Organisation for Economic Co-operation and Development, the Congressional Budget Office, and the International Monetary Fund have each published studies showing that income inequality has been increasing globally for the past several decades.

According to a 2011 review by the OECD, the average income of the richest 10 per cent of the population is nine times that of the poorest 10 per cent -- in other words, a ratio of 9-to-1. The U.S. ratio is much higher, at 14-to-1.